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prachi Patwardhan made post

Is it worth applying for the Ujjivan Small Finance Bank IPO?

Answer
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9 months ago


IPO of Ujjivan Small Finance Bank will open on December 2 and price band has been fixed at Rs.36-37 per share. It is fresh issue of equity shares aggregating up to Rs.750 crore. Ujjivan Financial Services is the holding company of Ujjivan Small Finance Bank. After the IPO, Ujjivan Small Finance Bank will become the second listed small finance bank after AU Small Finance Bank.

Ujjivan Small Finance Bank IPO highlights

· Opening Date - December 02

· Issue Closing Date - December 04

· Price Band – Rs.36 to Rs.37

· Lot size: Minimum 400 equity shares and in multiples of 400

Ujjivan Small Finance Bank services nearly 47 lakh 4 customers and gives loans to its micro banking customers that include group loans and individual loans, agriculture and allied loans, SME loans, affordable housing loans, financial institutions group loans, personal loans and vehicle loans. Its gross loan book stood at Rs.11,049 crore in March 2019 while deposits stood at Rs.7,379 crore.

RBI had asked Equitas Holdings and Ujjivan Financial Services to list their small finance bank units to comply with its norms, which mandate that a small finance bank with a net worth of more than Rs.500 crore must be listed within three years of the launch of operations. It is to satisfy this requirement that this IPO is being launched. While this IPO will be a good boost for the small finance bank, it may end up giving discount valuations to Ujjivan Finance due to its holding company status. One can take some encouragement from the fact that the recent issue of Catholic and Syrian Bank got oversubscribed by 87 times, showing the appetite for such stocks.